In case C-767/19, the Court of Justice had to rule on an action filed by the Commission against Belgium for failure to fulfil its obligations under Directives 2009/72/EC and 2009/73/EC concerning common rules for the internal market in electricity and natural gas (“third energy package”). In its judgment of 3 December 2020, the Court declared that Belgium had failed to fulfil its obligations when transposing said Directives, in particular in relation to the competences of the regulatory authority in the electricity and natural gas markets.
As a background for this decision, reference should be made to the action for annulment filed by the Belgian regulatory authority for the electricity and gas markets (the “CREG”) before the Belgian Constitutional Court. The CREG applied for the partial annulment of the law transposing the Directives 2009/72 and 2009/73 because several provisions of the law curtailed the powers it should have according to said directives. In its judgment of 7 August 2013, the Constitutional Court only partially granted the CREG’s requests. However, shortly after that judgment, the European Commission decided to take up the case and to investigate certain aspects of the Belgian transposition of the above-mentioned Directives which had not been annulled. Finally, it decided to ask the Court of Justice to establish Belgium’s failure on this issue.
In its judgment, the Court of Justice firstly noted that the Belgian transposition of article 9, paragraph 1, a) of the two Directives is not compatible with EU law. The Directives indeed stipulate that “each undertaking which owns a transmission system acts as a transmission system operator”. In the Court’s view, this implies that the transmission system operator should have the complete ownership of the transmission system. According to the Court, the objective of this rule is obvious: if the transmission system operator owns the system, it will be encouraged to make the investments and technical modifications that will enable it to operate and develop the network in an optimal manner. The Belgian legal framework was not in line with this requirement as it did not stipulate any obligation for the operator in relation to the ownership of the electricity and natural gas transmission systems.
Secondly, the Court examined the Belgian transposition of the European provisions concerning the competences of the regulatory authorities in the electricity and natural gas markets. The Court, upholding the Commission’s arguments, identified several problems of the Belgian legislation in this relation.
The first problem highlighted by the Court concerns the powers of the regulatory authority to ensure effective competition in the electricity and gas markets. Article 37, paragraph 4, a) and b) of Directive 2009/72/EC and article 41, paragraph 4, a) and b) of Directive 2009/73/EC provide that the regulatory authority has the mission to ensure transparency and effective competition on the electricity and gas markets. For this purpose, it should have the ability to adopt binding decisions, to carry out investigations and impose proportionate and necessary measures. Nevertheless, the competences of the regulatory authority are much more limited under Belgian legislation as it can only adopt “urgent measures” and it can only formulate opinions and recommendations as well as report alleged infringements to the Belgian competition authority. The Court considered that these possibilities were not sufficient to make up for the undue limitations of the CREG’s competences under Belgian law.
The Court also underlined a second problem in the Belgian transposition of these Directives. Indeed, EU law provides that the regulatory authorities should have the competence to set or, at least, approve transmission or distribution tariffs or their methodologies as well as ensure compliance of transmission and distribution system operators with their obligations under Directives 2009/72 and 2009/73. However, Belgian legislation provides that these competences, which should be entrusted to the regulatory authority, are regulated in a “technical regulation” and a “code of conduct” adopted by the federal government.
With this ruling, the Court again emphasises the importance for regulatory authorities to be able to fully exercise the competences attributed to them under European law and to do so in complete independence from public and private interests.
Please contact Pierre de Bandt or Jeroen Dewispelaere for further information regarding the above or for general information relating regulatory law.